Tax Book 2023

Chapter 30 Solved Past Papers Income Tax Numericals of ICMAP Stage IV - (2003 to 2018)

(i)Accounting depreciation of Rs. 75,000 on vehicle with W.D.V., of Rs. 500,000

(ii)

(iii)Commission of Rs. 120,000 has been paid to Mr. Arif for promotion of sales

(iv)

(i)Pay Rs. 60,000

(ii)House rent allowance Rs. 30,000

4. Mr. Umer is in reciept of income from property of Rs. 50,000 per month.

Provision for bad debts of Rs. 50,000 has been made, whereas actual bad debts are Rs.

80,000.

Utility bills amounting to Rs. 80,000 charged to expenses include Rs. 15,000 income tax

withheld on these bills.

3. Mr. Baqar is a sleeping partner. He is working as full time teacher in a university and receives
   monthly pay and allowances as under:

804___ Conceptual Approach to Taxes

Solution

M/s FRIENDSCO

AOP

Computation of taxable income and tax liability

For the tax year 2023

Rs. Rs. Rs.

Total NTR MTR

Allocation percentage (on basis of sales) 100% 87.50 12.50

(Rs. 5,600,000 / 6,400,000 x 100) = 87.5%

Sales 6,400,000 5,600,000 800,000

Cost of sales 3,200,000 2,800,000 400,000

Gross profit 3,200,000 2,800,000 400,000

Selling & admin exp. (assumed including bad debts) 2,400,000 2,100,000 300,000

Net profit before tax 800,000 700,000 100,000

Add:

5. The accounting depreciation on vehicle is also charged @ 15% of W.D.V., which coincides with
   the statutory rate of depreciation.

Add:

Accounting depreciation 75,000 65,625 9,375

Provision for bad debts 50,000 43,750 6,250

Commission paid to partner (Mr. Arif) 120,000 105,000 15,000

Income tax withheld on utility bills 15,000 13,125 1,875

260,000 227,500 32,500

Less:

Tax depreciation (Rs. 500,000 x 15%) = 75,000 65,625 9,375

Taxable income of AOP 985,000 861,875 123,125

804___ Conceptual Approach to Taxes